A collection of resources and commentary providing an introduction to supply chain management and related systems for students, practitioners, and anyone else interested in learning more about how to design, manufacture, transport, store, deliver, and manage products.

Monday, January 27, 2014

Online Grocery Shopping

As I read this week's reading, I began thinking about online grocery shopping and the type of supply chain that it entails. For me and for many American's alike, grocery shopping is more of a personal habit and chore that I believe you have to do yourself to properly reap the personal satisfaction. Sure when we were children we relied on our parents to buy the groceries and didn't care much if our fruit was bruised or if it was organic or not. As long as the colors were bright and sweet, we were content. But growing up and having to do your own grocery shopping, we have developed a personal nuance about where to grocery shop, what type of brands we want and when it comes to highly perishable goods, I want to physically see, touch and hold it before making the purchase. However I digress, as online grocery increases in popularity with the roll out of Amazon fresh last year, I wonder the logistical nightmare it entails to ensure customers are not only satisfied with their product but the products are fresh as well. Unlike traditional Amazon goods, groceries are perishable and have a very different shrinkage cost. We all know that Amazon has developed one of the premier supply chain models the world has seen, but the market of same or next morning delivery is very much a different beast on its own.

The traditional inventory model among online retailers cannot be applied to groceries. The annual good sold to average inventory cost must be interesting. I would imagine that a lot of the prices might differ (in this case a steeper price in online goods). I imagine they have to use a hybrid of continuous review system as well as a reorder point system to ensure that goods don't remain in the warehouse long enough for them to go bad. Although Amazon isn't the first company to begin this service, it is certainly one of the biggest (Walmart recently started testing in some select markets). I am interested in seeing the future of this and how these companies adapt to either increase demand, recalls, and storage. Online Grocery Shopping.